News Release

GartnerGroup's Dataquest Says LAN Switch Market Growth Continues to Outpace the Networking Equipment Industry

Dataquest's Second Quarter Results Show LAN Switches Revenue
Aug 20, 1998

Dataquest's Second Quarter Results Show LAN Switches Revenue Surpasses Routers and Shared Media Hubs

San Jose, Calif., August 20, 1998 -- The worldwide networking equipment industry was drivenby the LAN switch market in the second quarter of 1998, as revenue surpassed$2.1 billion, an increase of 78 percent over the second quarter of 1997,according to preliminary statistics from Dataquest Inc., a unit of GartnerGroup Inc. (NASDAQ:GART).

LAN switches, routers, and shared media hubs, reached$4.1 billion, up 27.8 percent from the second quarter of 1997.

"The switch market has been driven by the demandfor more efficient use of bandwidth," said John Armstrong, director andprincipal analyst for Dataquest's Networking Worldwide program. "As anearly entrant into the market, Cisco Systems has benefited the most fromthe rapid adoption of this technology."

Cisco continued to lead the LAN switch market, whichgrew 168 percent in the second quarter, and Cisco's own share of this marketsurpassed 40 percent (see Table 1). All segments of the LAN switch marketdid well, especially the Fast Ethernet segment, which surpassed the $1billion revenue mark during the quarter.

Table 1

Preliminary Worldwide LAN Switches Revenue Estimates for Second
Quarter 1998
(Millions of U.S. Dollars)

                  Q2/98  Q2/98 Market  Q2/97  Q2/97 Market  GrowthCompany         Revenue    Share (%)  Revenue    Share (%)   (%)Cisco               857         40.6     320       27.0     167.73Com                323         15.3     247       20.8      31.2Bay Networks        238         11.3     145       12.2      63.8Cabletron Systems   188          8.9     198       16.7      -4.6Others              503         23.9     277       23.3      81.6Total             2,109        100.0   1,187      100.0      77.6
Source: Dataquest (August 1998)

Cisco was the only top-tier vendor in the routermarket to increase its market share in the second quarter of 1998 (seeTable 2). Dataquest analysts said all segments in the router industry didwell. "The midrange and high-end router market segments experienced growth,providing evidence that enterprise networking business remains a stronggrowth engine in the router market," said Armstrong.

Table 2

Preliminary Worldwide Router Revenue Estimates for Second
Quarter 1998
(Millions of U.S. Dollars)

                 Q2/98   Q2/98 Market   Q2/97   Q2/97 Market  Growth Company         Revenue    Share (%)   Revenue     Share (%)    (%)Cisco             1,007      71.4        793         69.3      27.0Bay Networks        152      10.8        127         11.1      19.3IBM                  35       2.5         35          3.1       0.43Com                 31       2.2         32          2.8      -4.4Others              186      13.2        158         13.8      17.7Total             1,411     100.0      1,145        100.0      23.2

Note: Total percentages may not add to 100 percent due to rounding.Source:
Dataquest (August 1998)

The worldwide shared media hubs market suffered fromcontinued price erosion. Shared media hub shipments increased 13.8 percent,but revenue declined 33.5 percent. While the top-tier vendors all suffereda decline in revenue, 3Com continued to hold the No. 1 position with 23.5percent market share. Bay Networks was the No. 2 vendor with 21.3 percentmarket share, followed by Cabletron Systems, which posted 16.1 percentmarket share.

Additional market statistics are available in theDataquest Alert titled "Router, LAN Switch, and Shared Media Hub MarketPerformance for Second Quarter 1998." This report provides preliminarymarket statistics including market size by product category, market sharefor major segments.

This report is produced by Dataquest's NetworkingWorldwide program. This program focuses on the developing LAN and WAN technologiesand products that are driving the growth of the networking industry. Additionalinformation on this program can be found on Dataquest's Web site at

To purchase these reports, or to subscribe to Dataquest'sNetworking Worldwide program, please call 800/419-DATA, or 408/468-8009.More information about Dataquest's programs, descriptions of recent researchreports, and full text of press releases can be found on the Internet at

GartnerGroup's Dataquest is the recognized leaderin providing the high-technology and financial communities with marketintelligence for the semiconductor, computer systems and peripherals, communications,document management, software, and services sectors of the global informationtechnology industry.

As the world's leading authority on IT, GartnerGroupprovides clients with a wide range of products and services in the areasof IT advisory services, measurement, research, decision support, analysis,and consulting. Founded in 1979, with headquarters in Stamford, Conn.,GartnerGroup is at the center of a global community with more than 11,000client organizations served by analysts in 80 locations worldwide. Additionalinformation about the company is available on the Internet at

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